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| Version 1 | Version 2 |
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| Pension fees cap 'too high' says Legal and General | Pension fees cap 'too high' says Legal and General |
| (about 1 hour later) | |
| Leading pensions' provider Legal and General says the government's planned 0.75% cap on management fees is too high. | |
| The company says that, at that level, customers would pay more than £4bn too much over a lifetime of pension saving. | The company says that, at that level, customers would pay more than £4bn too much over a lifetime of pension saving. |
| The criticism comes on the same day as the deadline for submissions by the pensions industry to the government. | The criticism comes on the same day as the deadline for submissions by the pensions industry to the government. |
| Legal and General appears to be out of line with the rest of the industry, who are against any cap on fees. | Legal and General appears to be out of line with the rest of the industry, who are against any cap on fees. |
| Ministers believe the industry could be charging excessive amounts and want to curb charges. | Ministers believe the industry could be charging excessive amounts and want to curb charges. |
| The government has talked of a "full frontal assault" on fees levied by pension providers, with some older schemes charging more than 2%. | The government has talked of a "full frontal assault" on fees levied by pension providers, with some older schemes charging more than 2%. |
| Most leading groups believe a cap is not desirable as it will be hard to implement. | Most leading groups believe a cap is not desirable as it will be hard to implement. |
| But, by contrast, Legal and General not only wants a cap, but says the government's one is too generous and 0.5% would be better. | But, by contrast, Legal and General not only wants a cap, but says the government's one is too generous and 0.5% would be better. |
| Independent pensions expert Ros Altman told the BBC's Today programme that pension fees should not be capped too low. | Independent pensions expert Ros Altman told the BBC's Today programme that pension fees should not be capped too low. |
| "We don't want to dumb down pensions to the lowest common denominator," she said. | "We don't want to dumb down pensions to the lowest common denominator," she said. |
| She added that a low price cap would make it harder for pension companies to provide innovative strategies. | She added that a low price cap would make it harder for pension companies to provide innovative strategies. |
| Millions | Millions |
| Since last October, workers have been gradually signed up to workplace pensions, such as the government funded National Employment Savings Trust (Nest) scheme, unless they deliberately opt out. | Since last October, workers have been gradually signed up to workplace pensions, such as the government funded National Employment Savings Trust (Nest) scheme, unless they deliberately opt out. |
| With this auto enrolment now in place, millions more employees will be brought into company pension schemes over the next few years. | With this auto enrolment now in place, millions more employees will be brought into company pension schemes over the next few years. |
| The government's consultation process has been seeking industry input on three possible options - a 1% cap, a 0.75% cap, or a two-tier "comply or explain" cap, where pension providers will be capped at 0.75%, rising to 1% if they can explain to regulators why their scheme must charge more. | The government's consultation process has been seeking industry input on three possible options - a 1% cap, a 0.75% cap, or a two-tier "comply or explain" cap, where pension providers will be capped at 0.75%, rising to 1% if they can explain to regulators why their scheme must charge more. |
| Losses | Losses |
| Legal and General says the difference between 0.5% and 0.75% would mean more than £4bn of excess fees during a lifetime of saving by those customers. | Legal and General says the difference between 0.5% and 0.75% would mean more than £4bn of excess fees during a lifetime of saving by those customers. |
| The government said that someone who initially saved £1,200 in the first year and worked for 46 years could lose almost £170,000 from their pension pot with a 1% charge and more than £230,000 with a 1.5% charge. | The government said that someone who initially saved £1,200 in the first year and worked for 46 years could lose almost £170,000 from their pension pot with a 1% charge and more than £230,000 with a 1.5% charge. |
| These calculations assume that their contributions rise by 4% each year, and that the pension pot investment grows by 7% each year. | These calculations assume that their contributions rise by 4% each year, and that the pension pot investment grows by 7% each year. |
| In addition, these figures do not take inflation into account. In 46 years' time, the total amount will be worth less in real terms owing to the effects of inflation. | In addition, these figures do not take inflation into account. In 46 years' time, the total amount will be worth less in real terms owing to the effects of inflation. |